What's Really Driving TV Rate Increases

Every three years, cable television providers throughout the country are required by law to negotiate with local broadcasters (ABC, CBS, FOX, and NBC) for the rights to retransmit broadcast television signals to their cable customers. For the past several months, Reedsburg Utility (RUC) has been in negotiations with these broadcasters for retransmission consent fees.  Even though these over the air signals are broadcast free to the general public, cable television providers must pay what we view as excessive per subscriber monthly fees for the right to carry these networks.

A combination of factors has led to this unfortunate situation.  Most notably, outdated and overly prescriptive federal retransmission consent and network non-duplication laws and regulations have granted the broadcasters both a monopoly in their markets and the right to demand payment for their signals. The two rules combined have given broadcasters extraordinary market power in their retransmission consent negotiations with cable operators, allowing them to make what can be viewed as “take-it-or-leave-it” deals.

In this process, it is not unusual for the broadcasters to discriminate against small cable operators. Independent providers, like RUC, are often charged higher per-subscriber fees than their local competitors, which include large operators and satellite TV providers with national reach. The broadcasters take advantage of our need to carry these local stations to our subscribers and their effective monopoly in the television market by demanding as much as they can.

In addition to the “take-it-or-leave–it” philosophy, the broadcasters do not allow the operators to disclose the retransmission fees that are being forced upon small companies such as RUC.  Small cable operators across the country have lobbied that broadcasters disclose fees to the Attorney General’s Office but the fees do not get reported to the Attorney General until after January 1, 2015.  At this point, unless we want to lose the programming from the broadcasters, the contracts will be signed and the excessive rate increases will be locked in.

We know you want a good value. When networks demand huge fee increases, we work to get the best offerings at the best price possible so we can keep your bill as low as possible. RUC strives to do our best to negotiate fair fees so we can bring you the most affordable television service possible. However, we are facing big challenges.

  • Consolidation among the major networks means they have even more negotiating power.
  • These media conglomerates are demanding double or triple fee increases, and in some cases even more. The vast majority of your monthly cable bill pays for this programming.
  • We will be faced with two options — pay the exorbitant fees or lose the network(s) on our channel lineup through a “blackout.”

As a result, RUC will be forced to raise the rates of our TV packages to cover the expected fee increases from the networks.  We will update you as this process continues and work diligently on your behalf to keep costs down.  For more information on television programming challenges, visit http://tvonmyside.com.   We urge you to reach out to your local Congressional delegation to voice your concern on this matter.